Canada's federal government plans to postpone the sale of the state-owned Trans Mountain oil pipeline for after the 2025 general election amid politics, regulations, and slow progress in talks with indigenous groups, Bloomberg reported on Friday, quoting officials with knowledge of the discussions within the cabinet.
The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.3 billion (C$4.5 billion) at the time. Since then, the costs for the pipeline expansion have soared to nearly $23 billion (C$30.9 billion).
It's not certain that Canada's government can recoup all the costs it had plowed in the pipeline and its expansion if an auction is held before the election. A possible change of government after the 2025 election and ongoing talks with Indigenous groups about them owning a stake in the pipeline could also be reasons to delay the sale of the Trans Mountain pipeline, according to Bloomberg's sources.
Regulatory hurdles have added years to the timeline for the pipeline completion, but TMX received the final permits in early May from the Canada Energy Regulator (CER). This allowed it to enter into service on May 1.
The expanded pipeline is tripling the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta's oil sands to British Columbia on the Pacific Coast.
The rise in pipeline egress is set to boost the price of Western Canada Select (WCS), the benchmark for Canadian heavy crude sold at Hardisty in Alberta, as it will narrow the discount at which WCS has traded in recent years relative to the U.S. crude oil benchmark, West Texas Intermediate (WTI).
With TMX now in service, producers see more options to get their crude to demand centers-the U.S. West Coast and the prized Asian crude oil market.
By Charles Kennedy for Oilprice.com
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